Construction Insurance

Builder’s risk insurance is a type of property insurance that covers damage to a project under construction. A builder’s risk policy is a no-fault form of insurance—it doesn’t matter who is responsible for the loss, builder’s risk will typically cover the loss.

There are times where a contractor’s faulty workmanship may cause a loss to a project covered under builder’s risk insurance. That can raise the following question—does builder’s risk cover the costs to repair or replace defective work on a project?

Much like many construction insurance coverage questions, the answer depends on the language of the builder’s risk policy. Many times, a builder’s risk policy will have an exclusion for faulty workmanship.

But some builder’s risk policies also have an endorsement that expands coverage—the LEG 3 provision. The LEG 3 provision is a type of extra coverage that an insured can purchase. It adjusts the coverage available under a builder’s risk policy to include certain losses and damages associated with defective work. (LEG is the abbreviation for the London Engineering Group, which is an association of insurers providing a forum for discussion and education addressing insurance topics.)

In January 2024, a Florida federal court issued a lengthy opinion analyzing whether a builder’s risk policy with a LEG 3 provision covers the costs associated with replacing/repairing defective work.Continue Reading Does Builder’s Risk Insurance Cover Costs to Repair or Replace Defective Work?